Price of ebooks set to fall

New York
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In a landmark decision on Thursday, US district judge Denise Cote upheld the $96 million Department of Justice penalty imposed on publishers Simon & Schuster, Hachette and HarperCollins for conspiring to fix the price of ebooks.

The Department of Justice had also accused Apple, Penguin and Macmillan of the anti-competitive practices. All three companies denied the allegation and face trial next June.

The publishers and Apple were accused of acting collectively to force Amazon to abandon its discount pricing model by using the so called agency model, which allows the publisher, rather than the retailer, to set the price.

According to the Guardian, Judge Cote had been inundated with comments in support of the agency model and highly critical of Amazon's "predatory" pricing. Nevertheless, in her ruling she argued:

...even if Amazon was engaged in predatory pricing, this is no excuse for unlawful price-fixing.

Judge Cote characterised her ruling as:

...calculated to restore retail price competition to the market for trade ebooks, to return prices to their competitive level, and to benefit ebooks consumers and the public generally.

However, the judgement potentially opens the gates to an ebook price war, which could reshape the publishing industry, according to the Wall Street Journal. Critics fear Amazon will substantially discount the prices of ebooks. When Amazon did this a few years ago, it managed to capture 90 percent of the market, according to International Business Times.

Deputy General Secretary to the Society of Authors, Kate Poole, said of the decision:

Publishers large and small, authors and booksellers have all protested that the agency model is almost the only thing which stands in the way of Amazon using its dominant position to discount ebooks to prices other retailers cannot match, enhancing Amazon's market share but devaluing the product to the extent that in the long-term everyone (including Amazon) loses out.